Virtual water trade

International Virtual Water Flows

The concept of virtual, or embedded, water was first developed as a way of understanding how water scarce countries could provide food, clothing and other water intensive goods to their inhabitants. The global trade in goods has allowed countries with limited water resources to rely on the water resources in other countries to meet the needs of their inhabitants. As food and other products are traded internationally, their water footprint follows them in the form of virtual water. This allows us to link the water footprint of production to the water footprint of consumption, wherever they occur.

Virtual water flows help us see how the water resources in one country are used to support consumption in another country. See our FAQs page to clarify the difference between water footprint and virtual water.

Why is this important?

As nations work toward securing food, water, energy and other essential inputs for people’s well being, livelihoods and the country’s economic development, most countries rely on imports as well as exports of goods and services. A country may aim to be self-sufficient by relying primarily on goods that can be produced within its borders. Or a country may choose to reduce the burden on the natural resources within its borders by importing water intensive products.

A country may select energy security by using its natural resources to produce electricity in exchange for food security by importing food. The water footprint and its translation into virtual water can illuminate these choices and their inter-dependencies. Virtual water helps us understand the dependencies our economies have on others’ resources.

Coupling this with the water footprint enables us to map out the dependencies and to identify when and where risks may lie, in terms of scarcity and pollution. This has implications for food security, economy and diplomacy.

For water-scarce countries it can sometimes be attractive to import virtual water (through import of water-intensive products), thus relieving the pressure on the domestic water resources. This happens, for example, in Mediterranean countries, the Middle East and Mexico. Northern European countries import a lot of water in virtual form (more than they export), but this is not driven by water scarcity.

Instead it results from protection of their domestic water resources, land availability and land uses. In Europe as a whole, 40% of the water footprint lies outside of its borders.

Countries can both import and export virtual water through their international trade relations. Globally, the major gross virtual water exporters are USA, China, India, Brazil, Argentina, Canada, Australia, Indonesia, France and Germany and the major gross virtual water importers are the USA, Japan, Germany, China, Italy, Mexico, France, the UK and the Netherlands. The largest net exporters of virtual water are found in North and South America (the USA, Canada, Brazil and Argentina), Southern Asia (India, Pakistan, Indonesia and Thailand) and Australia. The biggest net virtual water importers are North Africa and the Middle East, Mexico, Europe, Japan and South Korea.

Water Saving by Trade

Many nations save domestic water resources by importing water-intensive products and exporting commodities that are less water intensive. National water saving through the import of a product can imply saving water at a global level if the flow is from sites with relatively high water productivity (i.e. commodities with a small water footprint) to sites with low water productivity (commodities with a large water footprint).

The total amount of water that would have been required in the importing countries if all imported agricultural products were produced domestically is 2 407 billion cubic meters per year. These products are, however, being produced with only 2 038 billion cubic meters per year in the exporting countries, saving global water resources by 369 billion cubic meters per year (Mekonnen and Hoekstra, 2011). This saving is equivalent to 4% of the global water footprint related to agricultural production (which is 8 363 billion cubic meters per year).

National policy makers in water-scarce countries are likely to be more interested in national water savings than in global water savings. There are many examples of water-poor countries that save their domestic water resources by importing water-intensive goods. Mexico, for example, imports maize and, in doing so, it saves 12 billion cubic meters per year of its national water resources. This is the volume of water that it would need domestically if it had to produce the imported maize within the country.